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Finance Newsletter – September 2015
August 21, 2015 | 
Author Do you have the most suitable loan for your circumstances?
Do you have the best rate available?
If your interest rate is over 4.09% variable then you may be able to save thousands per year by changing loans and or banks. I have access to a bank that is currently offering customers 4.09% variable home loans for the for the first 3 years of the loan. Conditions apply. With no application fee, no valuation fee .If you are interested in saving thousands per year call Mercia finance to see if we can show you how to benefit from a better rate.
Investors will have read that most banks are increasing the rate on investment loans. This includes current investment loans. If you are a property investor check your rates and find out if these increases apply to you. If you are not sure Ask Mercia finance for an obligation free loan check. Some institutions are not increasing the rates for investors. So this is a good time to make sure you have the best loan for your circumstances.
If you have questions regarding any type of loan, call Dan Goodridge on 04144 233 40. Our service is free of charge to you the borrower and we have access to all the major lenders in WA.
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Taxation Newsletter – September 2015
Small business tax discount on the way
In a surprise – but welcome – move in the 2015 Federal Budget, the Government announced a small business tax discount. The Government said that, with effect from 1 July 2015, individual taxpayers with business income from an unincorporated business that has an aggregated annual turnover of less than $2 million will be eligible for a small business tax discount. The discount will be 5% of the income tax payable on the business income received from an unincorporated small business entity. The discount will be capped at $1,000 per individual for each income year, and delivered as a tax offset through the individual’s end-of-year tax return.
Example: A person running a business as a sole trader has an annual turnover of $300,000 and taxable income of $75,000. Under the current law, the business would pay tax, at the owner’s marginal tax rate, of around $16,000 in total. Under the proposed new law, the $16,000 tax bill on the business income would be reduced by 5%, or $800. While there is no change in the owner’s tax rate, under the new law the owner would pay only $15,200 tax.
Legislation to implement the small business tax discount is currently awaiting formal enactment.
Ride-sharing provider challenges ATO’s GST view
Uber BV has lodged an application in the Federal Court to challenge the ATO’s view on GST in relation to ride-sharing drivers.
In May 2015, the ATO released information on its website providing its view of the tax obligations of people providing services in the sharing economy. The ATO was of the view that people who provide ride-sourcing (or ride-sharing) services were providing “taxi travel” under the GST law, and were therefore required to register for GST regardless of turnover, charge GST on full fare amounts, lodge BASs and report income in their tax returns. The ATO had given ride-sourcing drivers until 1 August 2015 to obtain their ABN and be registered for GST.
However, in a company statement, Uber argued that the ATO’s position unfairly targets Uber’s driver-partners. In the meantime, the ATO has maintained its view that people who provide ride-sourcing services are providing “taxi travel” under the GST law, and that it expects all ride-sourcing drivers to be registered for GST.
TIP: According to the ATO, although ride-sourcing drivers need to account for the GST on full fare amounts, they can also claim GST credits for relevant business expenses. The ATO says drivers must report income earned from providing ride-sourcing services; however, they can also claim deductible business costs. Please contact our office for assistance.
Crowdfunding for small proprietary companies: consultation
Crowd-sourced equity funding (or equity crowdfunding) is an innovative form of fundraising that allows a large number of individuals to make small equity investments in a company.
The Government is looking at ways to facilitate equity crowdfunding and has released details of its proposed regulatory framework for public companies. However, a key part of the Government’s public consultation is to also examine whether its proposed regulatory framework for public companies should be extended to proprietary companies.
The Government notes that proprietary companies are subject to limitations under the Corporations law on the way they can raise funds. These limitations make it difficult for proprietary companies to effectively use equity crowdfunding to raise funds from a large number of small shareholders. Accordingly, the Government is seeking views on way it could amend the law to make capital raisings by small proprietary companies more flexible. Public consultation closes on 31 August 2015.
SMSFs in pension phase need to exercise care
The ATO is of the view that most trustees of self managed super funds (SMSFs) do the right thing. However, it has identified a number of issues concerning SMSFs in pension phase, noting the growing number of people expected to receive a pension in the next 10 years.
The following gives a snapshot of some key issues identified by the ATO:
- Setting up and starting a pension: In the pension establishment phase, a fundamental and critical question that should not be overlooked is whether the member has reached preservation age. The ATO has reminded trustees that the legislated rise in the preservation age came into effect from 1 July 2015 – this affects people born after 30 June 1960.
- Paying a pension: One of the most common reasons for an SMSF in the pension phase not being entitled to applicable income tax exemptions under the exempt current pension income (ECPI) provisions is that the trustee has failed to pay the required annual minimum pension amount to a member.
- Ceasing a pension: The ATO is starting to see a range of issues related to what happens in the unexpected event of a pensioner’s death. For example, is the nominated reversionary beneficiary entitled to receive a death benefit pension under the terms of the SMSF’s deed and the law?
TIP: The ATO is starting to see liquidity problems associated with real property exacerbated for SMSFs in pension phase where the asset has been acquired under a limited recourse borrowing arrangement (LRBA). As the income of the SMSF is diverted to meeting the loan obligations of the fund, the ATO has found there can be insufficient funds remaining to make the required pension payments. There is also an added level of complexity to LRBAs involving related parties where the trustees fall foul of the arm’s-length rules in an effort to try to overcome their liquidity issues. If you have any concerns, please contact our office for further information.
ATO data-matching: immigration visa holders
The ATO has announced that it will acquire names, addresses and other details of visa holders, their sponsors and migration agents for the 2013–2014, 2014–2015, 2015–2016 and 2016–2017 financial years from the Department of Immigration and Border Protection (DIBP). The purpose of the data-matching program is to ensure that taxpayers are correctly meeting their taxation obligations. It is estimated that records relating to one million individuals will be obtained.
The ATO has been data-matching visa data from the DIBP (and its predecessors) against ATO data holdings for a number of years. The ATO said this electronic data-matching has been very effective in assisting to mitigate compliance risks. According to the ATO, empirical evidence from earlier data-matching programs has confirmed an elevated level of risk within the subset of taxpayers who are first-time lodgers with DIBP links.
Property Newsletter – August 2015
Time is money for development finance
While developers are always mindful of construction costs, it’s just as important to be aware of the costs associated with development finance, particularly when building delays occur.
Many first-time developers often forget that for every day their development is delayed, interest on their loan is still accumulating.
For example, let’s say a developer has a project which is being funded by a $2 million loan and the project hits significant delays at the halfway point.
This delay is likely to cost the developer in the vicinity of $13,000 each month in compounding capitalised interest, which means they pay interest on the interest.
While developments don’t usually experience month-long delays like this, it’s not unusual for delays of a day or two to occur at each step of construction.
The plumber, the tiler, the landscaper not starting early enough or the builder getting in their way.
It’s easy to see how a few days here and there can quickly amount to a month’s worth of downtime.
The cost of delays will vary from each project as it will depend on a number of factors, such as the interest rate, loan amount and drawn funds.
However, the interest on a fully drawn $2 million loan with a typical interest rate is about $13,000 per month capitalised and compounding.
Add to this other holding costs, such as rates, and development finance could end up costing a developer many thousands of dollars extra.
Many investors who want to develop but don’t have the time to manage the project often appoint a development manager who will manage the entire project and keep the builder to their time frames. Momentum Wealth is managing over $170 million in projects for our clients. If you’d like to speak to one of our development specialists please give us a call on 9221 6399 to see how we can help you with your project.
Tax implications for expat property investors
Despite living overseas, many Australian expatriates still regard property investment in their homeland as an attractive option. But what tax implications does this pose?
The tax implications of property investment can differ between Australian expatriates and those residents living in Australia.
Whether an individual is a tax resident under Australian law is dependent on a variety of factors and is unique to each case.
Subsequently, Australian expatriates, or expats as they are more commonly referred to, should seek the professional opinion of an accountant or lawyer who specialises in this area.
However, all income earned in Australia, including property rental income, is subject to tax in Australia.
In the instance where an individual is not an Australian tax resident, but they receive a rental income from an Australian-based property, they are required to prepare and lodge an Australian income tax return.
The non-resident tax rate stands at 33% for all income up to $80,000. This increases to 37% for income between $80,001 and $180,000 and 47% for income over $180,000.
Those individuals considered residents greatly benefit because they enjoy a much lower tax rate for the lower tax brackets.
For residents, tax rates start at 0% for income up to $19,400. This increases to 19% for income earned between $19,401 and $37,000 and 33% for income between $37,001 and $80,000. The rate of taxation after this is the same as a non-resident.
What’s important to note is that residents and non-residents can claim a tax loss if their tax deductible expenses are greater than their Australian taxable income. Residents can claim the loss against their other income. If you are a non-resident for tax purposes you can carry the loss forward to offset against future income.
A wise strategy for an Australian who is moving overseas to work is to accumulate tax losses on Australian property, which can then be offset from their income when they return to work in Australia. This can include any capital gains that are made when the property is sold.
This can be highly beneficial in instances where non-cash tax deductions, including depreciation, are a part of the tax loss.
If you are living abroad and are interested in purchasing an investment property in Australia, keep an eye out for our upcoming property investment eBook for expats.
Property selection critical for success
Affordability and proximity to the Perth CBD are this suburb’s two main strengths, however investors need to focus on certain pockets to make the best capital gains.
Girrawheen is located within the City of Wanneroo and comprises a population of about 8,300 residents with a relatively young median age of 33 years.
The suburb is 12 kilometres from the Perth CBD, which is accessible via Wanneroo Road, and is comparatively affordable with an average house price of $430,000.
Currently, about 80% of dwellings within the suburb are houses, which is reflective of its zoning – low-density residential (R30 or lower).
However, slated changes to Girrawheen’s housing strategy have recommended an increase in housing density to R20/40 and R20/60 in strategic locations, such as around the suburb’s shopping centres.
Given this, as well as some high concentration of state housing in the suburb, investors need to be particular about the specific pockets to buy in.
Girrawheen’s two major shopping centres are the Summerfield and Newpark precincts, while Warwick Shopping Centre is a short drive away but larger.
About 70% of the properties within the suburb are either fully owned or being purchased with 30% being rented – about the Perth average.
Girraween boasts many parks and ovals including the Warwick Reserve and Leisure Centre on its western boundary.
There are also multiple primary schools within the suburb as well as Girrawheen Senior High School.
Residents can also take advantage of the Joondalup train line with Warwick station only several kilometres from the suburb.
Leasing tips in a tenants’ market
Like many industries, property markets run in cycles according to supply and demand. So what can be done to lease your property in a tenants’ market?
When supply catches up to demand, it’s natural for the rental market to shift in favour of tenants.
While it’s inevitable that at some stage, under the supply and demand model, the momentum will swing back to the advantage of landlords, what can be done in the meantime?
One of the biggest mistakes made by landlords in a tenants market is to refuse to meet market demand.
By failing to adjust rents or contract terms, landlords expose themselves to significant financial losses.
This might mean having to drop the rent or to offer more flexible contracts that will suit tenants, such as a 6-month contract or pet-friendly contract.
A $10 or $20 loss in weekly rent is negligible compared to a property that remains empty for several weeks because it’s overpriced.
Landlords should also present their properties to the highest standards, ensuring they are clean, enjoy plenty of natural light and the gardens are well maintained.
When in-between tenants, it’s a great opportunity to complete renovations or odd jobs that will help attract prospective tenants.
A fresh coat of paint, new carpet, installing modern fixtures and fittings or other cosmetic upgrades will make a property more appealing.
In the event of an expiring lease, negotiations for a new contract should be undertaken well in advance.
Landlords should engage tenants up to 75 days before the lease is due to expire to determine their tenants’ intentions.
From there, landlords can start to negotiate the terms of a new lease, or start planning the search for a new tenant.
How to build your way to wealth – part 1
Property development is regarded by many investors as the Holy Grail because of the huge profits on offer. So what does it take to be a doyen of development?
When done right, property development can deliver handsome rewards for investors.
However, the pitfalls and challenges are great and varied, which means first-time developers need to be extremely cautious about their investment decisions.
In the first part of this three-part series, we outline 10 tips to help property developers mitigate the risks and maximise profits.
1. Know the ins and outs of the industry
Before you even start thinking about development sites or plans, you need to gain a comprehensive understanding of property development. If you’ve decided to oversee the development yourself, there are dozens of people you’ll need to coordinate with throughout the process. It’s wise to know who these people are and the roles that they play
Some of the various specialists include:
- Building inspectors
- Engineers/geotechnicians
- Solicitors
- Surveyors
- Building companies
- Designers/architects
- Town planners
- Local councils
Generally, it’s not advised that individuals oversee their own developments, particularly first-time developers. This can be one of the biggest mistakes to make as many underestimate the requirements and demands of property development and soon find themselves facing massive budget blowouts. Rather than overseeing the development yourself, you can engage the skills of a development manager, who will complete all the leg work for you. Alternatively, you can also participate in a joint venture or a property syndicate, which allow you to gain exposure to a development project with less risk.
2. Understand the market
Equally important as knowing the development industry is understanding the state of the property development market. To do so, you’ll need to consider a range of factors such as the price points of respective suburbs; the demand of particular dwelling types; the stage of the property cycle; and economic drivers of the area, among others.
To gain a comprehensive understanding of the market, research is essential. Look at recent data and statistics about demand and supply and talk to property professionals to obtain first-hand insights. Your knowledge of the market can mean the difference between buying a development site with high-upside growth potential or one that turns out to be a financial flop.
3. Search for a development site
Finding the right development site is the most important step to becoming a successful property developer. The development potential of your site will be dependent upon its size, zoning and location, as well as other factors such as if the site contains easements. When you’ve found a site, you need to consider a number of issues. These include:
- The zoning regulations and subdivision rules. You should obtain a written statement from the relevant council as these can often be misquoted in advertisements.
- If the site is heritage listed. If this is the case it’s usually better to continue your search for a different development site.
- Any structure plans, planning policies, area plans or proposed rezoning for the area that might affect the site.
The second part of this three-part series will be published in the September edition of Property Wealth News, and explain how a feasibility study will you help to avoid investing in a dud development and how to purchase your site like a professional.
Taxation Newsletter – August 2015
Work-related and rental property claims on ATO’s watch list
Tax time is in full swing and the ATO has highlighted areas of concern for individuals ahead of tax return lodgment time. High on the ATO’s watch list is work-related expense claims that are significantly higher than expected. In particular, the ATO will be paying particular attention to claims that have already been reimbursed by employers and expenses that are, in fact, private. These items are not deductible.
TIP: You are entitled to claim deductions for some expenses that are directly related to earning your income. The expenses must not be private, domestic or capital in nature. If the expense is both private and work-related, you can claim a deduction for the work-related portion.
The ATO will also keep a keen eye on rental property deductions. The ATO will be playing close attention to:
- excessive deductions claimed for holiday homes;
- husbands and wives splitting rental income and deductions inappropriately for jointly owned properties;
- claims for repairs and maintenance shortly after the property was purchased; and
- interest deductions claimed for the private proportion of loans.
TIP: You can claim expenses relating to your rental property but only for the period your property was rented or available for rent (eg advertised for rent). If part of your property is used to earn rent, you can claim expenses relating to that part of the property. You will need to work out a reasonable basis to apportion the claim. Please contact our office for assistance.
Share-economy service providers need to assess tax implications
New internet and mobile technologies have allowed people to consider enterprises such as letting a spare room, letting a car space, doing odd jobs or other activities for payment, or driving passengers in a car for a fare. However, the ATO has warned that individuals providing such share-economy services may have tax obligations, which may include declaring income and registering for GST.
TIP: It may be prudent for all share-economy service providers to assess whether they are meeting their tax obligations. Please contact our office for assistance.
The ATO has also confirmed that people who provide ride-sharing services are providing “taxi travel” under the GST law. It said the existing tax law applies and therefore drivers are required to register for GST regardless of their turnover. Affected drivers must also charge GST on the full fare, lodge BASs and report the income in their tax returns.
TIP: Recognising that some taxpayers may need to take corrective actions, the ATO is allowing drivers until 1 August 2015 to obtain an ABN and register for GST. The ATO said it does not intend to apply compliance resources regarding GST obligations for drivers prior to 1 August 2015 – except if there is evidence of fraud, or other significant matters.
Franked distributions funded by capital-raising under scrutiny
The ATO has cautioned companies about raising capital to fund franked distributions. The ATO is reviewing arrangements where companies raise new capital to fund franked distributions and release accumulated franking credits to shareholders.
In a typical case, the ATO is seeing companies issue rights to shareholders and use funds raised to make franked distributions via special dividends or an off-market share buy-back. The ATO said these arrangements are distinct from ordinary dividend reinvestment plans involving regular dividends.
ATO Deputy Commissioner Tim Dyce said the distributions are unusually large compared to ordinary dividends and occur at a similar time, and in a similar amount, to the capital raised. “So, a potentially large amount of franking credits is released with minimal net changes to the company’s economic position. There is also minimal impact on the shareholders, except in some cases they may receive refunds of franking credits and in the case of buy-backs they may also get improved capital gains tax outcomes,” he added.
The ATO considers that the arrangements may not be compliant with the tax law. In particular, the ATO has warned of the potential application of the general anti-avoidance rules. It has also warned that penalties may apply to participants.
“Contrived” dividend arrangements used by SMSFs flagged by ATO
The ATO is investigating arrangements where a private company with accumulated profits channels franked dividends to a self-managed super fund (SMSF) instead of to the company’s original shareholders. As a result, the original shareholders escape tax on the dividends and the original shareholders (or individuals associated with the original shareholders) benefit as members of the SMSF from franking credit refunds to the SMSF.
The ATO was concerned that contrived arrangements are being entered into by individuals (typically SMSF members approaching retirement) so that dividends subsequently flow to, and are purportedly treated as exempt from income tax, in the SMSF because the relevant shares are supporting pensions. The ATO also warned the arrangement has features of dividend stripping which could lead the ATO to cancel any tax benefit for the transferring shareholder and/or deny the SMSF the franking credit tax offset.
Lump sum finalisation payment taxable
An individual has been unsuccessful before the Administrative Appeals Tribunal (AAT) in a matter concerning the tax treatment of a lump sum finalisation payment. The Tax Commissioner considered the payment was assessable as ordinary income. The taxpayer disagreed.
In 1995, the individual was diagnosed with a number of illnesses and was deemed unfit for work. She was paid monthly benefits under her employer’s salary continuance policy, which she declared as assessable income. When that scheme discontinued, she commenced participation in a government scheme which continued the monthly payments. In 2008, she was informed that the Commonwealth intended to finalise its obligations and pay a final lump sum in July 2008. Under a deed of release, the scheme made a final payment of just over $2 million to the taxpayer, less an amount of $931,119.40 (being tax withheld and remitted to the ATO).
The AAT concluded the final payment was “income according to ordinary concepts” under the tax law. It was therefore assessable income to be taken into account in assessing the taxpayer’s taxation liabilities for the year ended 30 June 2009.
“Nomad” had continuity of association with Australia
An individual has been unsuccessful before the AAT in arguing that he had “let go” of Australia in 1999 to pursue his “nomadic” working life abroad and that his base of operations was in the United Kingdom.
The taxpayer was born in the United Kingdom, and worked as a diver and diving supervisor for overseas companies at many places around the world.
However, the AAT held he was a resident of Australia for the 2006 to 2011 income years for tax purposes. The AAT noted that the taxpayer’s physical, emotional and financial ties to Australia in those years were very strong. In particular, he jointly owned a home in Australia with his wife of over 23 years and his emotional ties to her were “clearly the most significant in his life”.
The AAT also held the taxpayer did not satisfy the rules to have his foreign sourced income treated as exempt income, nor was he entitled to any foreign tax offset as he had not produce evidence of any foreign tax paid on his overseas earnings.
The AAT therefore affirmed amended tax assessments which increased the taxpayer’s tax liability by around $300,000 for the relevant income years.
The taxpayer has appealed to the Federal Court against the decision.
Property Newsletter – July 2015
Essential tax tips for property investors
With tax time upon us, here are some handy tips to help minimise your taxable income and potentially save you thousands of dollars.
It’s important for all property investors to know what they can claim as a tax deduction to ensure their income, and subsequently personal wealth, are maximised. Knowing what you’re entitled to claim could save you hundreds or even thousands of dollars.
Here are some basic property investment tax tips to help maximise your returns this financial year.
Property investors can claim “plant and equipment” items on investment properties as depreciable articles – these are treated separate to the dwelling.
Items are considered “plant and equipment” depending on a number of factors, such as how permanently the item is attached to the land or building.
A list of items considered “plant and equipment”, as well as their depreciation rates, is available from the Australian Tax Office
Items that you can typically depreciate in your investment property include:
- Carpets
- Air-conditioning units
- Appliances, such as ovens and hot plates
- Security systems
- Blinds
- Ceiling fans
If you have purchased an investment property, any of these existing items considered “plant and equipment” can be claimed depreciable. However, you first have to determine the purchase cost of these individual items.
There are three ways you can do so.
- You can specify it in the purchase price of your investment property
- You can make your own reasonable estimate of the value of the asset included in the purchase price
- You can obtain a value through an independent valuer, or depreciation expert
Momentum Wealth recommends in most cases that clients obtain an independent valuation from a depreciation expert.
Aside from “plant and equipment”, property investors can claim some items associated with the dwelling in certain circumstances.
The dwelling on an investment property is not normally considered to be a depreciable item because it‘s not “plant and equipment”. However, some provisions have made the cost of constructing buildings, and other capital items incurred in rental properties, to be depreciable in certain circumstances.
For example, “construction expenditure” on an investment property that produces an income can be written off at 2.5% per annum. For residential property, this applies if the construction commencement date was after 15th September 1987 .
The term “construction expenditure” is related to expenditure on the dwelling and includes preliminary expenses, such as architect and engineering fees, among other items. This does not include demolition costs, clearing of land or landscaping, though.
Property investors can also claim travel expenses in some instances.
Transportation, meals and accommodation can be deductible for numerous reasons, including preparing the property for rent, rent collection or for inspections and maintenance.
This is even the case with investment properties located interstate. Property investors can claim the cost of flights and accommodation as a tax deduction in some instances. Be careful though – if you take a holiday at the same time, the ATO may argue the dominant purpose was to have a holiday and the trip may not be deductible.
7 steps to a multi-million dollar property portfolio
The large majority of Australian property investors own only one investment property – so how can you stand out from the pack and build a multi-million dollar portfolio?
Many first-time investors have grand plans of building a large property portfolio, in many instances as many as 6, 8 or 10 properties, or even more.
While such goals are realistic and obtainable for many, the large majority of investors (72% according to statistics from the Australian Taxation Office) only own one investment property.
The key to building a multi-million dollar property portfolio is to follow 7 key steps.
The first step to building a massive property portfolio is to create a long-term plan. This will clearly state your property investment goals and outline how these can be achieved.
Your property investment plan should include your risk profile, current life/professional situation and financial capacity. You can then develop a long-term plan identifying the types of properties suited to your portfolio (villas, development or commercial, for example), the estimated time frames you can achieve those goals and what steps you need to take to achieve them.
The second step is to adequately organise your finances.
Most banks and brokers aren’t aware of the proper finance structure needed to build a large portfolio so it’s important that you deal with a broker who specialises in investment properties. This is particularly pertinent for cross collateralisation.
The third step is one of the most crucial – the acquisition of your investment property. The performance of the property you choose will have a significant impact on the timeframe you can purchase your next property, so choose wisely.
Choosing an investment property requires a huge amount of time and research, including detailed analysis of suburbs and the individual property. You need to identify areas that exhibit strong capital-growth drivers, such as economic activity, transforming demographics or infrastructure projects, and focus on these.
Once you’ve purchased your property, the forth step is to consider add-value opportunities that will help you increase its value. This can be done through renovation or development.
The fifth step is to effectively manage your property to achieve maximum returns. It’s wise to utilise the services of a professional property management business.
More often than not, the level of service you receive will be reflected in the price you pay. A good property manager will keep you up to date with market rent reviews and provide advice to optimise your assets.
The sixth step is to continually grow your knowledge of the property market. Stay informed by attending relevant seminars, reading industry-specific publications and stay in touch with like-minded property enthusiasts.
The seventh, and final, step is to regularly review your property portfolio. This will help to you stay focused on your property investment plan, keep your assets optimised and, ultimately, achieve your goals.
Once you’ve reached the final step you can start the 7-step process again to purchase successive investment properties until you’ve reached your long-term goals.
Education and employment hubs aplenty
St James – This suburb is close to a major education hub as well as the Perth CBD and would greatly benefit from a slated light-rail system.
St James is located within the City of Canning and has a population of about 4,500.
Being located next door to Curtin University’s Bentley campus – the western border of St James is less than 500 metres to the campus – the suburb has a high concentration of younger residents with a median age of 30 years.
Subsequently, about 47% of properties in St James are leased, often to university students.
As well as being in close proximity to the university, St James is also just 7 kilometres from Perth’s CBD and is connected by Albany Highway, which runs through the suburb to East Perth.
The Welshpool and Cannington industrial zones are also other significant employment hubs that are nearby.
The suburb’s major retail hubs are the Bentley Shopping Centre and the Cannington retail area, however the larger Carousel Shopping Centre is just a few kilometres down Albany Highway.
Zoned mostly low-density residential (R30 and under), St James has more than 75% of dwellings listed as houses.
The suburb is well serviced by high-frequency public bus transport, primarily because of its proximity to Curtin University.
A light rail project slated for the area, which would service the university and Perth CBD, has been deferred but remains part of the long-term development plan.
There are also some pockets of state housing, which investors must be aware of.
In addition to the university, St James also has multiple primary schools nearby.
Spend a little now to save a lot later
Its news that everyone dreads – your property manager calls saying something needs repairing and it will be expensive. However, there are ways to mitigate this scenario.
Owning a large property portfolio can deliver huge financial windfalls, but just like a business, there are many associated costs that investors need to be aware of, including general maintenance.
Maintenance costs should be considered even before purchasing a property because if you can’t afford the maintenance you can’t afford the property.
Some property investors will ignore maintenance issues simply because they don’t want to spend the money.
However, more often than not, tending to minor maintenance issues now will prevent much larger problems in the future, and could potentially save you thousands of dollars.
This is why property investors need to create a maintenance plan and factor in ongoing maintenance costs to their budgets.
Specific areas that are prone to wear and tear or natural deterioration should be identified and a program of maintenance should be implemented.
For example, if you don’t want to do it yourself, budget for an annual gutter clean before winter.
By failing to do so, investors run the risk of their gutters becoming clogged with debris and may face rusting gutters, which will inevitably need replacing – an expensive exercise in any case.
Similarly, investors should also budget for regular tree lopping, replacement of carpets and fresh painting, among other items.
The amount of preventative maintenance needed will vary from property to property.
However, creating a simple maintenance plan and factoring these costs into your budget will help to avoid major unexpected costs in the future.
Massive profits through development syndicates
Property investors are cashing in on development opportunities following changes to Western Australia’s town planning laws.
The revised regulations, which have been driven at both the state and local government level, have led to a significant increase in property development opportunities in the Perth metropolitan area.
For example, many sites previously only suitable for villa and townhouse style developments can now be developed into small boutique apartments complexes.
Typically, these types of developments can contain 6 to 40 units across 2 or 3 storeys.
This higher lot yield has significantly increased the profitability of these specific sites.
In the past, these types of developments have usually been out of reach of the average property investor because of the huge upfront capital requirement.
However, with the advent of development syndicates, in which a group of investors pool their funds, more people can gain exposure to the huge profits that these types of projects offer.
Momentum Wealth’s development syndicate in Carine, just 12 kilometres north of the Perth CBD, is a great example of this.
This development was launched after Momentum Wealth clients invested $4 million into the acquisition of three development sites.
The result was a development of 16 apartments and three townhouses with a price range of between low $500,000’s to $1 million plus.
Most investors would not have the financial capacity, or know-how, to complete a project of this scale on their own.
However, the syndicate allowed them to pool their capital to access a high-return development opportunity. Furthermore, with Momentum Wealth project managing the entire development, the clients haven’t had to lift a finger.
Demand for these types of boutique apartment complexes in Perth is expected to increase in the coming years as many retirees want to downsize but remain in their local area, rather than move to an apartment in the Perth CBD.
The Carine development syndicate, for example, has been designed to a very high specification to cater for the ‘empty nester’ market. The project is also located in a highly desirable area close to the beach, bushlands and vibrant activity centres with café strips and retail precincts nearby.
Massive profits through development syndicates
Property investors are cashing in on development opportunities following changes to Western Australia’s town planning laws.
The revised regulations, which have been driven at both the state and local government level, have led to a significant increase in property development opportunities in the Perth metropolitan area.
For example, many sites previously only suitable for villa and townhouse style developments can now be developed into small boutique apartments complexes.
Typically, these types of developments can contain 6 to 40 units across 2 or 3 storeys.
This higher lot yield has significantly increased the profitability of these specific sites.
In the past, these types of developments have usually been out of reach of the average property investor because of the huge upfront capital requirement.
However, with the advent of development syndicates, in which a group of investors pool their funds, more people can gain exposure to the huge profits that these types of projects offer.
Momentum Wealth’s development syndicate in Carine, just 12 kilometres north of the Perth CBD, is a great example of this.
This development was launched after Momentum Wealth clients invested $4 million into the acquisition of three development sites.
The result was a development of 16 apartments and three townhouses with a price range of between low $500,000’s to $1 million plus.
Most investors would not have the financial capacity, or know-how, to complete a project of this scale on their own.
However, the syndicate allowed them to pool their capital to access a high-return development opportunity. Furthermore, with Momentum Wealth project managing the entire development, the clients haven’t had to lift a finger.
Demand for these types of boutique apartment complexes in Perth is expected to increase in the coming years as many retirees want to downsize but remain in their local area, rather than move to an apartment in the Perth CBD.
The Carine development syndicate, for example, has been designed to a very high specification to cater for the ‘empty nester’ market. The project is also located in a highly desirable area close to the beach, bushlands and vibrant activity centres with café strips and retail precincts nearby.